What Is The Cycle To Work Scheme?

Are you thinking ahead to New Year’s resolutions and kick starting a healthier lifestyle? The Cycle to Work Scheme could be the perfect solution.
Nearly 20 years ago the UK Government introduced the scheme, as a tax exemption initiative, and so far hundreds of thousands of employees have taken advantage of it. The benefits of the scheme are all encompassing, for employee, the company and the environment.

Life seems to be increasingly busy for all of us, juggling work and family and squeezing in downtime and social time. Most of us seem to be on a constant quest to get fit and healthy but for many there just isn’t enough time to squeeze in a gym workout, a run or an exercise class. Combining exercise with your commute to and from work seems like the ideal solution. Cycling has countless health benefits such as improving cardiovascular fitness, muscle strength and flexibility, decreasing stress levels and is an excellent way to reduce and manage weight. Starting and ending your day with physical exercise will enhance your overall fitness as well as improve your concentration and productivity, not to mention burn off the calories of the obligatory office snacks we are known to indulge in.

The Cycle to Work Scheme enables employees to purchase a bike and accessories for up to £1000 and pay it back tax free over a period of approximately 12 months (depending on the provider). The bike can be used for commuting as well as personal use. At the end of the ‘hire period’ there are three options:

the employer can return the bike

the employee can buy the bike out at fair market value (in accordance with HMRC requirements)

the employee pays a small deposit (normally 3%-7% of the certificate value) and use the equipment for 3 more years with no monthly charges, it is then their property

The reason that the scheme is so attractive to employers and employees alike is that it is an opportunity to save money. The monthly payments are taken as a salary sacrifice, it is therefore tax free and employees save an estimated 42% of the overall value. Employers save an average of 13.8% in the amount of National Insurance they pay as well as being able to treat it as capital expenditure.

For those companies who are not yet part of the scheme it would be advisable to look into it, the health benefits to employees will be reflected in their work. Fitter and healthier employees would lead to less sickness absence, improved productivity and morale and ultimately positively affect retention rates.